Craigs Investment Partners Limited
Investor Basics
Investing in Shares
Contents
Topic 1
What are shares?
1
Topic 2
Why invest in shares?
2
Topic 3
Why diversification is important
4
Topic 4
Why do share prices fluctuate?
5
Topic 5
Are my shares performing?
6
Topic 6
How do I buy shares?
10
Topic 7
How do I know what to buy?
12
Topic 8
How do I know when to buy or sell?
14
Topic 9
How do I start investing?
15
Topic 10
How and where can I learn more?
16
Disclaimer: While this report is based on information from sources which Craigs Investment
Partners considers reliable, its accuracy and completeness cannot be guaranteed. Craigs
Investment Partners, its partners and employees, do not accept liability for the results of any
actions taken or not taken upon the basis of information in this report, or for any negligent
mis-statements, errors or omissions. Those acting upon information and recommendations do
so entirely at their own risk. Craigs Investment Partners and/or its partners and employees may,
from time to time, have a financial interest in respect of some or all of the matters discussed.
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© Craigs Investment Partners 2012
Topic 1 – What are shares?
There are many ways in which you can invest, and
one of them is in companies. Companies come in all
shapes and sizes, from small ‘one-man bands’ through
to large enterprises.
There are two types of companies;
1 Private
2 Public
Private companies
Private companies are privately owned, and any
expenses or business development is funded by the
private owners.
Public companies
Public companies are owned by a number of investors,
called shareholders.
Some companies may have one or two shareholders
and some may have thousands.
When you buy a share in a company you are effectively
becoming a part owner and have a stake in that
company. The business will be able to use your money
to fund developments, such as business expansions
into new markets or building new factories.
In return for investing in the company, shareholders
can receive a share of the profits, known as dividends.
Investors also share in the increased value of the
company the more successful it becomes (through
capital growth), or conversely the decreased value for
under-performance.
As you have purchased a part of the company and are
a shareholder, you will automatically have an interest in
all aspects of the business including their assets (e.g.
the land and buildings they own) and how it is run. As
a shareholder you have a number of entitlements such
as being able to vote at company meetings.
Shares (also referred to as stocks, securities or
equities) for public companies are usually bought and
sold through a stock market exchange. The market to
buy shares in New Zealand’s best known companies
is called NZSX. The Australian Exchange is called
the ASX but there are also many other exchanges
(markets) around the world. These stock markets act
as the ‘trademe’ for shares, pairing up buyers and
sellers. The companies that are bought and sold here
are called ‘publicly listed’ companies.
Investors can also buy shares in ‘publicly unlisted’
companies. These are usually companies which
are too small to qualify for a stock exchange listing.
Since they are not listed on an exchange, they are not
covered by the same regulation and compliance as
listed companies. These companies are also less liquid.
Liquidity is a term which refers to how easily
and quickly you can buy or sell your shares (or other
investments).
For more information please read the
‘Overview of Investing’ booklet.
Examples of some
Private Companies
Family Farm
Trade Business
Eg: Builders, Electricians
Retail Store
Auckland International
Airport / Air New Zealand
Apple Inc
BHP Billiton
Newcrest Mining
Examples of
Public Companies
For more information please contact your Investment Adviser, a local branch by phoning 0800 272 442 or visit www.craigsip.com.
This document is general and should not be considered as specific investment advice.
© Craigs Investment Partners 20121